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Quicken Owner Win in Overtime Trial A Victory for Right Over Wrong

March 18, 2011
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When a federal lawsuit was filed against Dan Gilbert and Quicken Loans Inc. in 2004, Gilbert immediately said he would not settle.

Instead, he hired a team of lawyers and has spent almost seven years defending his company’s policy to not pay overtime to loan officers who also earn commissions.
During a media event March 17 after the victory, Gilbert said the case has been about principles.

“It’s a victory for right over wrong,” he said. “We have to stand up in this country and say ‘no’ when we're approached by law firms like this that are doing nothing other than trying to extract money though settlements.”

On March 17, a jury ruled in favor Quicken’s use of overtime policies.

The ruling means Quicken will not be forced to pay the nearly 350 plaintiffs an additional half-time for their hours worked during their time at Quicken, avoiding an estimated $4 million to $30 million in damages.

Gilbert would not reveal how much he has spent in attorneys' fees but said, “I'll put it this way: It’s more than what it would have cost to settle.”

With dozens of similar cases being tried across the country right now, it is unclear what impact the legal precedent may set.

Don Nichols, a partner with the Minneapolis-based law firm representing the former employees, said that loan officers need to be paid overtime and that the Quicken ruling will not affect other cases.

He said he plans to appeal the ruling and is also asking for a new trial.

“This was a heartbreaker; we were really put through the ringer,” said Nichols, a partner with Nichols Kaster Attorneys at Law. “It’s still a winnable case.”

Asked what needs to be done differently to produce a winning result: “A different day, that's all,” he said.

In closing arguments before Judge Stephen Murphy III in the U.S. District Court's Eastern District in Detroit, attorneys gave vastly different job descriptions of the company’s mortgage bankers.

One image was of salespeople forced to work 12-hour days and make enough sales to not be fired. The other was of highly paid analysts helping consumers weather their debt situations.

The two scenarios fall on different sides of one legal point.

The case hinged on a portion of federal labor law that spells out overtime. Specifically, an exemption from overtime requirements is granted for financial services employees who have discretion to make decisions and whose duties are primarily office-related and focused on clients of the firm.

But that exemption is not available for sales-oriented positions.

The jury was asked to rule on two parts: whether the loan officers are exempt from the law requiring overtime and, if they are not exempt, how many hours they worked each week.

The jury ruled that the positions are exempt from overtime but also ruled that the employees worked zero hours over 40, said Mayer Morganroth, a partner with Morganroth and Morganroth PLLC of Birmingham, the firm representing Quicken.

He said the jury did not have to write “zero.”

“That they went to that extent shows how angry they were,” he said.

Ryan Henry, the named plaintiff for the case, said he’s disappointed with the outcome.

“When we started, and they said it would take a long time, I was thinking three years, not seven,” he said.

“At this point, I’m not going to say I’m not disappointed, and I’m not giving up. But I’ve got a newborn and I’m living in another state, so I’ve got a lot of other things to keep me occupied now.”  

Filed by Daniel Duggan of Crain’s Detroit Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

 

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